Just as marketers and advertising executives are set to converge on Orlando this week for the Association of National Advertisers' annual Masters of Marketing Conference, the contentious issue of media rebates is heating up again.
An industry insider familiar with the situation said the ANA board will meet in Orlando on Wednesday to discuss whether the principles agreed upon this summer by a joint task force, comprised of senior members of the ANA and its agency counterpart, the 4A's, are sufficient to set aside the ANA's call for a third-party auditor to address allegations of media agency fraud. The source added that while there is consensus on the principles of transparency, anything at this point is possible.
The allegation at issue is whether agencies are receiving large rebates—or kickbacks—from media outlets in exchange for buying ads in large volumes. When such savings are hidden from clients and pocketed by agencies, it crosses an ethical line that can enrage brand marketers.
ANA evp and CMO Duke Fanelli confirmed the issue of media rebates and transparency will be addressed at the ANA board meeting and the decision to hire a firm for "fact-finding" will be decided then. Any announcements will be made at the end of the month.
4A's President and CEO Nancy Hill declined comment.
The issue came to a head in March at ANA's 2015 Media Leadership Conference, where former Mediacom CEO Jon Mandel gave a blistering presentation accusing agencies of questionable business practices involving rebates and the lack of disclosure to clients.
Among the tasks set forth in the ANA RFP issued this summer:
1. Demystify the landscape: Auditors are to interview "marketers, agencies, publishers, vendors, on not just rebates but also "the broad landscape that covers inventory selection and management, barter, arbitrage, "dark pools," agency trading desks, and global inventory management/swaps."
2. Understand the role of holding companies: ANA points to the global scale of holding companies' assets and resources as key to perpetuating transparency issues. Though IPG chief Michael Roth and WPP CEO Martin Sorrell have firmly stated that media kickbacks are not a factor in the U.S. (as opposed to countries in Europe and Brazil where the practice does exist).
WPP's Martin Sorrell says firmly that media kickbacks are not a factor in America: "There are no rebates in the U.S." #CannesLions
— Adweek (@Adweek) June 26, 2015
3. Determine if client demands are "pushing the limits." Is the business at such a point that it's leaving agencies no choice but to "resort to less transparent behavior"?
Accusations of murky media transparency first permeated the industry following an ANA member survey three years ago which found that "a wide swath of marketers" had been unaware of media rebates and their role in the media buying process.